LISC connects businesses to opportunities
Impact Lending program helps minority- and women-owned businesses scale up with loans, access to contracts at NU
For many small businesses, access to capital is a critical need. But obtaining a loan can be a challenge, particularly for small start-up businesses, creating a chicken-and-egg feedback loop that prevents them from bidding on large contracts.
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Through a partnership between the Local Initiatives Support Corporation and Northeastern University, local Boston-area businesses have a new opportunity to scale up their business and obtain the funding to do so.
Under LISC’s Impact Lending program, Northeastern University serves as an anchor institution for the local community, providing contracts to businesses owned by people of color and women while LISC vets the businesses and provides them with low-interest loans that help scale up to take on the work.
“Take a painter, for example,” says Eric Uva, Director of Small Business Lending at LISC. “They might need capital to purchase a new truck and paint sprayer. We would provide them with the loan. At the same time, we would introduce the owner to the [Northeastern] procurement staff so they can establish a first-person relationship.”
The concept of impact lending is a new approach at harnessing the economic clout of large institutions to effect economic development in the surrounding communities by helping small businesses grow.
“There are 5.8 million small businesses in the United States with fewer than 20 employees,” Uva said. “They account for nine out of ten businesses. They are the engine of growth in the economy. They employ more than 50 percent of all workers and they’re responsible for more than two-thirds of jobs created.”
Anchor institutions — insurance companies, universities, hospitals and other large institutions — are often located in or near areas with high concentrations of poverty. The LISC Impact Lending program will be available to businesses in Boston as well as in the so-called gateway cities including Brockton, Lowell and Springfield.
Northeastern is the only institution partnering with LISC for this program. Uva says contracts with Northeastern will provide a tremendous boost to businesses looking to grow.
“Contracts from an institution like Northeastern are game changers,” he said. “It’s an opportunity to escape the endless cycle of just meeting payroll. You’ll get more business, steady business, that will allow you to expand.”
So far there are several businesses enrolled in the program that have entered into talks with Northeastern about obtaining contracts for goods and services.
LISC was created in 1979 by executives from the Ford Foundation as a nonprofit community development financial institution to help provide capital for economic development in low-income areas. The organization’s lending arm — LISC Small Business offers loans from $1,000 to $1 million to help small businesses grow, create jobs and drive economic development in their communities.